ERP Software Research & Development Spend

In Sun TzuThe Art of War for Managers ©2001 by Gerald A. Michaelson, on the point about “Marshal Adequate Resources”, we’re talking about having enough wherewithal or resources to successfully carry out a military campaign, or in this case, run a successful business or practice. From Webster’s Dictionary, “marshal” can mean to “bring together and order in an appropriate or effective way”. Michaelson goes on to say amongst other management skill and product factors that “…all business problems eventually become financial problems.” I found it especially interesting that the author makes the point “…Microsoft invest(s) more than 15 percent of sales in research and development”. I decided to perform a fast search and discovered that today, 20 years later, Microsoft still invests 15% back into Research & Development (R&D); so in 2020 that’s 19.3B USD R&D spend against a 125.84B USD 2019 revenue. I’m not suggesting that 15% is a magical number or that there even is one, but apparently it’s working for Microsoft.

Microsoft Invests 15% Back Into Research & Development

When presenting Microsoft ERP products to potential customers, my Sales Engineer always mentions Microsoft’s billions in R&D spend each year, the point being that hardly any ERP software publishers spend that much on continuously improving their application, functionality, user experience, and interoperability than Microsoft. It shows in their roadmaps and regular bi-yearly Wave 1 and Wave 2 Releases every April and October for Dynamics 365 family of products. What this demonstrates is that R&D spend has been a critical component to Microsoft’s success. More importantly, this also helps to ensure that your people and processes will have adequate support and future, which is significant to your business.

It’s fascinating how many businesses view IT spend as a necessary ad hoc expense, rather than budgeting for and viewing it as an ongoing investment in their future and having the right tools for the job. In today’s world, failing to continuously improve your IT resources, software, infrastructure, training, et cetera, actually accumulates “technical debt” and will eventually slow or prevent expansion or competitive advantage as employees will start utilizing manual workarounds and shadow IT to perform critical business processes and decisions while the competition is leveraging automation in Sales, Marketing, Production, and Delivery to succeed and win more often.

Failing to continuously improve your IT resources, software, infrastructure, and training accumulates “technical debt”

The above points became even more significant with an increase in employees performing work remotely. What better way to expose weaknesses in business processes, IT readiness, infrastructure?

Ask yourself these questions to determine where you may benefit from improvements in your business:

  • What is your IT strategy?
  • What is your annual IT spend?
  • What percent of revenue do you allocate to R&D for your products, production, services, or business processes to ensure you maintain a competitive advantage?
  • What are your resources? Is it enough to meet expected or projected demand?
  • What is your preparedness for market setbacks or risk mitigation strategy?
  • How prepared are you to go to war in the marketplace?

I’ll be the first to admit need for improvement, but do we even do a good job of this in our personal lives? Sun Tzu’s wisdom from 2,500 years ago helps us to reflect on this and think more strategically about ordering and managing adequate resources, i.e., have enough fuel in the tank to make the journey or in his case, win a war.

If you have questions about improving your ERP solution, please get in touch with us.

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